Page 16 - DECO201_MACRO_ECONOMICS_ENGLISH

Unit 1: Introduction to Macro Economics

(b) Supply Notes
(c) Aggregate demand
(d) Aggregate supply
15. Which of these comes under the purview of fiscal policy?

(a) Changes in interest rate
(b) Change in supply of money
(c) Change in exchange rate
(d) Change in government spending

1.4 Summary

Macro Economics is the study of the economy in the aggregate with specific focus on
unemployment, inflation, business cycles and growth".

Macro Economic policy debates have centered on a struggle between two groups; Keynesian
economists and classical economists. Later Post Keynesian economists came in with their
views.

Macro Economics is the study of the aggregate modes of the economy, with specific focus
on problems associated with those modes - the problems of growth, business cycles,
unemployment and inflation.

1.5 Keywords

Business Cycle: Recurring fluctuations in economic activity consisting of recession, recovery,
growth and decline.
Fiscal Policy: Economic term that defines the set of principles and decisions of a government in
setting the level of public expenditure and how that expenditure is funded.

Gross National Product: It is the total value of all final goods and services produced within a
nation in a particular year, plus income earned by its citizens (including income of those located
abroad), minus income of non-residents located in that country.

Inflation: A general and progressive increase in prices.
Macro Economics: The branch of economics that studies the overall working of a national
economy.

Monetary Policy: Government or central bank process of managing money supply to achieve
specific goals-such as constraining inflation, maintaining an exchange rate, achieving full
employment or economic growth.

1.6 Review Questions

1. Compare and contrast the views of Classical economists, Keynes.
2. Describe the main points of Fisher's theory.
3. Do you think study of Macro Economic aggregates is useful for an individual firm? Justify
your answer.
4. Contrast the views of Keynes and Post Keynesian economists.

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